Buying a home is a series of new experiences coming at you at the speed of light. And the closer you are to getting your hands on those keys, the higher the stakes are and the bigger the pressure is.
That’s why we’ve put together a comprehensive home-closing checklist. This checklist outlines everything you need to take care of in the days leading up to the sale.
1. Make sure all contingencies are taken care of
A vast majority of real estate transactions have contingencies (things that buyers must do before the transaction is official). Some of the most common contingencies include:
- Home inspection contingency: This gives the buyer the right to have the home professionally inspected. If something is wrong, you can request it to be fixed or even back out of the sale.
- Appraisal contingency: Your mortgage lender should (and likely will) hire a third party to evaluate the fair market value of the home. If the appraised value is less than the sale price, you’re able to back out of the deal without forfeiting your earnest money deposit.
- Financing contingency: This contingency gives you the authority to back out of the deal if your mortgage approval falls through.
2. Clear the title!
As part of the closing process, your mortgage lender will require a title search, and you’ll need to purchase title insurance to protect yourself from legal claims to the house.
There have been stories of, for example, distant relatives (or an ex-spouse) claiming they own the home, and that the seller has no right to sell it to you. Clearing the title will ensure this does not happen.
You can choose the title company if you wish; but you can also get recommendations from your real estate agent, mortgage lender, or friends. Just be sure to check out the license and reputation of the company.
3. Get final mortgage approval
You have to make sure your home loan goes through the underwriting process. Underwriters (like detectives) make sure you have represented yourself and your finances truthfully.
The underwriter (employed by your mortgage lender) will check your credit score, review your home appraisal, and ensure your financial portfolio has remained the same since you were pre-approved for your loan.
4. Review the closing disclosure
Also known as a HUD-1 settlement statement, this official document outlines your exact mortgage payments, the loan’s terms, and additional fees you’ll pay (closing costs).
Make sure to compare your closing disclosure to the loan estimate your lender provided to you. If you spot any discrepancies, make sure your lender explains them.
5. Perform one more walk-through of the home
More often than not, you’ll be able to do a final walk-through of the home within 24 hours of the closing. Make sure the previous owners (or tenants) have vacated the home (unless you’ve allowed rent-back, which lets them stick around for a period of time).
Also, double-check that the home is in the condition agreed upon in the contract.
6. Bring all necessary documentation to closing
Here are all the items you’ll want to bring with you to the closing table:
- Proof of homeowners insurance
- A copy of your contract with the seller
- Home inspection reports
- Any paperwork that the bank required in order to approve your loan
- A government-issued photo ID
Finally, be prepared to sign a lot of paperwork. But don’t worry! An attorney or settlement agent will guide you through the process. When you’re done, you’ll have your new set of keys and a place to call home.